Brooke Masters: Latest trend in investor activism raises questions

By Brooke Masters, on Wed Jul 16, 2014 at 1:30 PM ET

When most US investors do not like the way a company is heading, they vote with their feet and sell their shares. But a new generation of activist investors is challenging that tradition by opting to amass shares and demand board representation and strategic change instead.

Hertz, the car rental group, became the latest US company to come under such pressure. It is now said to be considering selling or spinning off its equipment hire business after stakebuilding by investors including Dan Loeb and Carl Icahn.

While activists have been around for decades, the scale appears unprecedented. Such hedge funds were managing $90bn as of last year’s fourth quarter, almost triple the total five years ago, according to Hedge Fund Research.